I spent a lot of time dreaming about winning the lottery when I was younger. Imagining how I’d spend the money and how my life would change was a regular pastime.
At 22, I decided to get real. I’d just discovered personal development and had my “think big” hat on. Full of youthful optimism, I set myself the goal of becoming a millionaire by 30.
A decade later, I can reveal that I’m not a millionaire. Not even close.
I’ve made good progress. I no longer worry about money, and I have savings and investments. But I missed my goal by a long way.
Looking back, was the goal realistic? Can you become a millionaire in 10 years? And what does it take? In this post, I look at this common goal with a healthy dose of reality.
When investing, your capital is at risk.
How many millionaires are there in the UK?
The best source on UK wealth is the Office for National Statistics’ Wealth and Assets Survey. It counts everything a household owns: property, pensions, savings and investments, and physical assets such as cars and jewellery.
The latest figures, for April 2020 to March 2022, show:
- The typical (median) household was worth £293,700.
- A household needed £1,200,500 or more to be in the wealthiest 10%.
- A household needed £3,121,500 or more to be in the wealthiest 1%.
So a little over one in ten households is worth £1 million or more. That sounds like a lot of millionaires. But this is wealth per household, not per person, and it includes the family home and pensions. Very few individuals have £1 million they could spend.
Wealth also rises sharply with age. The median household headed by someone aged 16 to 24 was worth £15,200. For those aged 65 to 74, it was £502,500, 33 times as much.
Two things are clear from this.
1. Very few people are millionaires, especially by 30.
It’s obvious to me now. But as an inexperienced young man following “guru” advice, I really thought that if I believed, I would achieve.
Building serious wealth young isn’t impossible, but it’s rare. Social media and the fake-it-till-you-make-it culture would have you believe everyone is rich. They aren’t. Becoming a millionaire by 30, 40 or even 50 is unusual. Anyone sitting on £1 million at 30 is an outlier, and their success usually can’t be copied.
2. You generally get wealthier as you get older.
Wealth grows with age as we pay off the mortgage, our home rises in value and our pensions and investments grow.
So your best chance of becoming a millionaire is to follow sound advice from your first pay packet to retirement: live below your means, save and invest as much as you can, and start as early as possible. Even then, it isn’t guaranteed. That’s the unglamorous truth.
Is there a shortcut? The survey figures describe the average Brit. Anyone pursuing FIRE and saving far more than average has a better chance of becoming a millionaire, and of doing it faster.
How long does it take to become a millionaire?
Let’s run the numbers. Assume you invest every month and earn 7% a year. Here’s how long it takes to reach £1 million:
| Monthly investment | Years to £1 million |
|---|---|
| £100 | 59 |
| £250 | 46 |
| £500 | 36 |
| £1,000 | 28 |
| £2,000 | 20 |
To become a millionaire in 10 years, you’d need to invest about £5,780 a month.
These figures ignore fees and tax, and returns aren’t guaranteed. They also ignore inflation. With inflation at 2.5% a year, £1 million in 30 years’ time would buy what about £477,000 buys today.
Reality check
Putting away £5,780 a month is out of the question for almost everyone. So unless your YouTube channel takes off, you get in early on the next big thing or a rich relative leaves you a fortune, becoming a millionaire in 10 years probably won’t happen. Sorry to burst your bubble.
The good news? You can still become a millionaire in your lifetime. If you invested an average of £1,000 a month from age 20, you’d reach £1 million in your late 40s.
I know £1,000 a month is a pipe dream for most 20-year-olds. But that’s an average. You might save much less at first. As your career progresses and you earn more, you may manage £1,000 or more each month, counting pension contributions (including your employer’s), other investments and mortgage repayments.
What will help most is focusing on what you can control.
The factors within your control
Hard work and discipline are a must. Beyond that, a few things decide how fast your wealth grows.
1. Your savings rate
We all know we should save more, but we rarely have a strong reason to. If your goal is a seven-figure net worth, finding another £100 or £200 a month can bring it forward by years. There’s your motivation.
An extra £100 could be as easy as eating out less or cycling to work. To go further, cut the cost of the big three: housing, transport and food. Once you’ve cut what you can, focus on earning more.
2. When you start investing
The earlier you start, the better your chances, because compound growth has longer to work. Combine compound growth with regular contributions and your investments can grow dramatically over time.
So, start investing as soon as you can, even if it’s only £10 a month. Use tax-free wrappers: a Stocks and Shares ISA (up to £20,000 a year) and a pension, where tax relief and employer contributions boost what you pay in.
3. Your investment returns
Our 10-year calculation assumed 7% a year. A higher return means you need to save less:
- 5% a year: about £6,440 a month
- 7% a year: about £5,780 a month
- 10% a year: about £4,880 a month
Chasing higher returns means taking more risk, and most investors who try to beat the market end up doing worse than it. Keeping fees low is the return boost you can control. Other income-producing assets, such as property, can also add to your returns, but they come with their own risks and work.
4. Mindset
This one’s a bit woo-woo, but hear me out. I’ve read plenty of personal development books. Much of it is hype, but some of it is valuable.
One useful idea is being aware of your beliefs and where they came from. Beliefs you pick up young can shape your whole life. If you believe you’re bad with money, don’t deserve to be rich or that rich people are greedy, you may hold yourself back without realising it. A windfall slips through your fingers. A pay rise disappears into higher spending.
If you hold limiting beliefs about money, you can change them, through reading, coaching or spending time with people who handle money well. Your mindset could be the thing standing between you and your first million.
Wrapping it up
Becoming a millionaire in 10 years is possible, but unlikely for most people. Saving your first £100,000 is far more achievable.
To get to £1 million through saving and investing, you need to save a big share of every pay packet, invest it well and give it time. Building a business or a successful channel might get you there faster, but it’s far less certain.
For the best chance of reaching the big M, save hard, invest wisely and focus on what you can control.
Disclaimer: This is not financial advice. The value of investments can go down as well as up and you may get back less than you invest.
Pedro is passionate about finance, marketing, and technology. He is a growth manager at several online projects and a former digital marketer for a fintech company.
